LONDON, Aug 7 (Reuters) - Gold prices rose towards $1,615 anounce in Europe on Tuesday, lifted by a recovery in the euroversus the dollar and in stock markets, as optimism grew thatthe European Central Bank will act to lower borrowing costs forSpain and Italy.

Safe-haven German Bund futures extended losses as appetitefor assets seen as higher risk picked up. The euro climbed backtowards a one-month high against the dollar, while Europeanstocks pared early losses.

Spot gold was up 0.1 percent at $1,612.80 an ounce at0943 GMT, while U.S. gold futures for August deliverywere down 70 cents an ounce at $1,615.50.

"It's all about the exchange rates," Citigroup analyst DavidWilson said. "We've had a slightly softer dollar, and that'sbeen supportive."

"Every so often we get some more optimism that Europe issorting out its problems, as we did over the second half of lastweek, but I don't think this (strength) will continue," headded. "For that, we really need to see a significantly softerdollar, and that won't happen until the Fed takes action."

Gold bulls are hoping the Federal Reserve will launchanother round of quantitative easing later this year to boostU.S. growth, which would hurt the dollar while keeping long-terminterest rates at rock bottom and stoking inflation fears.

Disappointment that the Fed did not give any clear clues onthe timing of QE combined with disappointment that ECB PresidentMario Draghi did not unveil another round of bond-buying by thebank to push gold prices lower last week.

But although Draghi's guidance on fresh ECB action was heavywith caveats and conditions, he opened the door to a new roundof policy action that could even involve quantitative easing - abold step the ECB has previously shunned.

"Draghi... reiterated that the ECB was ready to engage in'non-standard' measures, potentially involving open marketoperations," VTB Capital said in a note.

"Global risk sentiment turned bullish on high expectationsfor stimulus in the monetary union."

INDIAN DEMAND SOFT

Gold demand in major consumer India was sluggish ahead offestival season, which begins this month and runs through untilNovember. "(The) market is really slow, there is not much ofactivity before festivals," a dealer with a private bank dealingin bullion said.

That was their biggest one-day inflow in ounce terms sinceMarch 1, with the bulk of new flows seen into products operatedoutside the United Stats by London-based ETF Securities.

Silver was up 0.3 percent at $27.94 an ounce. Spotplatinum was up 0.6 percent at $1,403.24 an ounce andspot palladium was up ` percent at $580.47 an ounce.

"Platinum and palladium are being given a boost by more badnews from South Africa, where state energy provider Eskomreports an unplanned outage of 11.5 percent of its energyproduction capacities at present, the highest figure for nearly2 months," Commerzbank said in a note.

"Added to this is an additional scheduled outage of 3percent. This is fuelling fears of electricity rationing in theplatinum and palladium mines."